Which of the following is the purpose or objective of financial analysis?
Answer & explanation
Correct answer: option 4
* To assess the current profitability and operational efficiency of the firm as a whole as well as its different departments so as to judge the financial health of the firm.
* To ascertain the relative importance of different components of the financial position of the firm.
* To identify the reasons for change in the profitability/financial position of the firm.
* To judge the ability of the firm to repay its debt and assessing the short-term as well as the long-term liquidity position of the firm.